Britain has secured legal guarantees that taxpayers will not become liable for legal or compensation costs potentially running into billions of euros following a eurozone decision to close a bank under "banking union" plans.

Britain has secured legal guarantees that taxpayers will not become liable for legal or compensation costs potentially running into billions of euros following a eurozone decision to close a bank under "banking union" plans.

The European Union has agreed "general" principles to give eurozone regulators new powers to close failing banks and to hit bondholders with losses amid doubts that the resolution structures are workable.

George Osborne, the Chancellor, attended the talks and won legal guarantees to ensure that British taxpayers cannot be liable for any decisions taken for the eurozone via any extra burdens imposed by bank closure decisions on the EU budget.

"We have consistently said we support the creation of a eurozone banking union, but that the interests of British taxpayers must be protected," said a UK government spokesman.

"Through this agreement we have made sure that under no circumstances will British taxpayers be financially liable for the costs related to resolution decisions taken as part of banking union."